Business Law

Benefits of using a Corporation to conduct business rather than a sole proprietorship or a general partnership:
  1. Limited Liability – Corporations provide liability protection to its owners. With sole proprietorships or general partnerships, owners are generally legally considered the same as the business, and personal assets can be seized to pay business debts.
  2. Tax Advantages - Corporations have some tax advantages such as: deductibility of health insurance premium paid on behalf of owner and employee, deductibility of other expenses such as life insurance, and the ability of the Corporation to retain income to be taxed at the corporate rate. For more information on the type of tax advantages, please speak with an accountant or tax advisor.
  3. Credibility – Being a Corporation may help a new business establish credibility with potential customers, employees and the general public.
  4. Duration – A Corporation’s life is not dependent upon the life of its owners. If an owner dies or wishes to sell his or her interest, the Corporation will continue to exist and do business thereafter.
  5. Retirement Plans – Often time qualified retirement plans are easier to establish (such as a 401K). Again, you should consult with an accountant or tax advisor.
  6. Capital – Capital can often be raised easily through the sale of stock. Sometimes lenders prefer for the borrower to be in a corporative business.
  7. Ownership – Ownership in a corporation is easy to transfer. The stock can be signed over as personal property.
  8. Protection for Owners – In most cases a judgment against an owner is only a lien against the real property in the name of said owner. An individual can thereafter form a corporation and can often buy and sell real estate in the corporate name.
Benefits of using a Limited Liability Company (LLC) to conduct business rather than a sole proprietorship or a general partnership:

  1. Limited Liability – Typically, owners of an LLC are not responsible for the debts and liabilities of the business; thus creditors can not pursue owner’s personal assets to pay business debts. In a sole proprietorship or general partnership, owners in businesses are often considered the same, and personal assets can be seized to pay business debts.
  2. Past Through Taxation - LLCs typically do not pay taxes at the business level. Any business income or loss is past through to the owners and report on the owner’s personal income tax returns. Taxes are thereafter paid at the individual level. Please speak with an accountant or tax advisor regarding the tax advantages.
  3. Credibility - Forming an LLC may help a new business establish credibility with potential customers and the public.
  4. Expense - LLCs are less expensive to establish than a traditional corporation, and less expensive to maintain.